November 8, 2011
China's bumper harvest this year, with grain output expected to lift 2.3% to 560 million tonnes, will be significant to relieving domestic inflation pressure as well as stabilising the global grain market, a senior economist said.
This will be an on-year increase for the ninth straight year, with average yield and total production both likely to hit record highs, according to results of a survey by the Ministry of Agriculture.
Rice, wheat, and corn account for more than 80% of China's grain output, with paddy taking up the biggest proportion.
Since the beginning of 2010, the country's grain prices have increased rapidly, which also helped drive up the Consumer Price Index (CPI). Food prices, which account for nearly one-third of the basket of goods in the nation's CPI calculation, were up 12.3% in the first eight months.
In the past two months domestic grain prices have remained stable thanks to expectations of an output increase. The CPI grew 6.1% on-year in September, marking a decline for the second months running.
China's inflation growth will show a downward trend in the following months as the bumper grain harvest is a foundation for stabilising consumer prices, said Zhuang Jian, a senior economist with Asian Development Bank.
Chen Xiaohua, vice-minister of agriculture, said that grain prices would continue to rise supported by mounting costs, but at a modest pace.
This year, international grain prices have been rising persistently, and the risk of a global grain crisis is gradually rising. The severe floods in Thailand and the surrounding rice producing countries will add to uncertainty in the grain market.
Besides, a grain crisis in Africa is developing. Global grain prices would continue to fluctuate in the mid-term, the United Nations said in a report.
Economists generally hold that China, the most populous nation in the world, is sound in terms of its grain supply and reserves, and in the meantime the country is increasing its grain support overseas, which will play an active role in stabilising the international market.